Most individual company 401(k) retirement plan participants have no idea how the recent price drops in tech stocks like Facebook, Apple, Amazon, Netflix, Google, Microsoft, Alphabet and Tesla have negatively impacted their account values.
The quick and severe declines in these tech sector stocks lead the S&P 500 stock index to decline 1.2% in the first quarter of 2018. That decline snapped a stretch of nine consecutive quarters of investment gains.
The S&P 500 and the NASDAQ 100 are made up of individual stocks that are weighted according to their market capitalization. The high-priced and most popular high-tech stocks make up the largest part of popular stock market benchmarks.
The eight stocks listed above make up over 15% of the S&P 500 index. Nearly 48% of the NASDAQ 100 is made up of these same eight technology stocks.
Facebook’s data privacy issues and President Trump’s recent comment about “going after” Amazon are just two of the most events that have reversed tech stock prices from all-time highs of just a few months ago.
Know it or not, like it or not. You are very heavily invested in the biggest high-tech stocks in every company 401(k) retirement plan stock market mutual fund you own.
Take a look at the top ten holdings of just about anything U.S. large, mid, or small cap growth mutual fund. You will instantly recognize the names of the same tech stocks that have lead the recent stock market decline.
Don’t think for one minute that you are diversified if you own a handful of mutual funds with different names These mutual funds all own the same companies. And most of those companies are tech companies.
It is very important now to “know what you own” in each of your company 401(k) retirement plan mutual funds.
Ric Lager
Lager & Company, Inc.
